Treasury note yields; clarification of tax deductions relating to Paycheck Protection Program

As of 9:57 am AST 19 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .08%

6-month: .09%

12-month: .10%

2-year: .17%

10-year: .86%

30-year: 1.58%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major political/legal event in the United States

Yesterday, the U.S. Department of the Treasury released the following:

The U.S. Treasury Department and Internal Revenue Service (IRS) released guidance today clarifying the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. 

Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.

If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not.  Therefore, we encourage businesses to file for forgiveness as soon as possible.

In the case where a PPP loan was expected to be forgiven, and it is not, businesses will be able to deduct those expenses. 

“Today’s guidance provides taxpayers with greater clarity and flexibility,” said Secretary Steven T. Mnuchin.  “These provisions ensure that all small businesses receiving PPP loans are treated fairly, and we continue to encourage borrowers to file for loan forgiveness as quickly as possible.”

Source: U.S. Department of the Treasury

Foreign ownership of US Treasurys fall in September. Downtick in longer term rates …

As of 9:25 am AST 18 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .08%

6-month: .08%

12-month: .11%

2-year: .17%

10-year: .85%

30-year: 1.59%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major political/legal event in the United States

Treasury releases data on foreign investment in the United States

Yesterday, the United States Department of the Treasury reported that “in September of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of $79.9 billion.  Of this, net foreign private outflows were $40.3 billion, and net foreign official outflows were $39.6 billion.”  The Treasury International Capital report also noted that there was a decline in foreign investor ownership of Treasury bills in the amount of $30.3 billion in September 2020.

Longer term yields tick up; Twitter’s Dorsey, Facebook’s Zuckerberg to testify before Senate.

As of 7:55 am 17 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .08%

6-month: .08%

12-month: .11%

2-year: .18%

10-year: .88%

30-year: 1.64%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major political/legal event in the United States

President Trump nominates Joseph Barloon to the US Court of International Trade

Yesterday, President Donald Trump sent the name Joseph L. Barloon to the United States Senate as a nominee for a seat on the United States Court of International Trade.  Mr Barloon currently serves as general counsel to the United States Trade Representative and serves as the acting deputy USTR for China Affairs.

Source: Executive Office of the President

Facebook, Twitter CEOS to testify before Senate sub-committee

Today, Facebook chief executive officer Mark Zuckerberg and Twitter chief executive officer Jack Dorsey will testify before the U.S. Senate Committee on the Judiciary.  The leaders and founders of the two social media giants will be asked questions about censorship during the 2020 general election.

Source: United States Senate Committee on the Judiciary

Yields increasing on longer term Treasurys

As of 9:22 am 11 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .09%

6-month: .10%

12-month: .11%

2-year: .18%

10-year: .98%

30-year: 1.74%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major event in the United States

Treasury announces tax deduction for pass-through entities

Last Monday, the U.S. Department of the Treasury announced rule changes that clarify that State and local income taxes imposed on and paid by a pass-through entity are allowed as a deduction by the pass-through entity in computing its non-separately stated taxable income or loss for the taxable year of payment. 

Source: Treasury.gov

9 November 2020: Yields for 30-year Treasurys increase …

As of 11:31 pm 9 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .09%

6-month: .09%

12-month: .12%

2-year: .17%

10-year: .91%

30-year: 1.69%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major political/legal event in the United States

Biden launches transition website

Presumptive president-elect Joseph R. Biden has launched a transition website that describes his initial initiatives he plans to address upon taking office in January 2021.  Mr Biden appears prepared to engage in a level of spending to address faults and inequities in the American economic infrastructure that were in place prior to the Covid pandemic.  Spending initiatives include:

  • Providing state, local, and tribal governments with financial assistance;
  • Extending Covid crisis unemployment insurance to people out of work;
  • Provide a financial package for small businesses and entrepreneurs;
  • Creation of a public health corps that puts the unemployed to work fighting the pandemic.

No discussion has been provided by the transition team yet on the costs of these packages and the impact they may have on money supply expansion/contraction, trade, or foreign exchange rates.

Source: BuildBackBetter.com

Treasury announces tax deduction for pass-through entities

Today, the U.S. Department of the Treasury announced rule changes that clarify that State and local income taxes imposed on and paid by a pass-through entity are allowed as a deduction by the pass-through entity in computing its non-separately stated taxable income or loss for the taxable year of payment. 

Source: Treasury.gov

Bond rates, Fed Funds rates … and ballot counting close to its climax

As of 10:57 am 5 November 2020, U.S. Treasury rates and Federal Funds rates are as follows:

3-month: .09%

6-month: .09%

12-month: .12%

2-year: .15%

10-year: .77%

30-year: 1.54%

Fed Funds Rate: 0.08%

Federal Reserve Target: 0.25%

Prime Rate: 3.25%

Source: Bloomberg

Major event in the United States:  Ballot counting is continuing in the U.S. presidential elections. Democratic presidential candidate Joseph R. Biden reportedly has 264 unofficial Electoral College votes while Republican candidate Donald J. Trump has 214 unofficial Electoral College votes.

The official declaration of President-Elect is scheduled for 14 December 2020.

Today, the Board of Governors of the Federal Reserve System concludes their Federal Open Market Committee meeting.  The Board will report its fed funds rate decision at 2:00 pm EST.

Source: Bloomberg, Federal Reserve